By Kara van den Heever
Revenue forecasts are holding firm, spending remains within the limits outlined in March 2025, and the shuffling of funds across departments has not led to any dramatic budget revisions. On paper, it is a portrait of stability and optimism.
But beneath the surface of those reassuring numbers lies a different reality: one of growing uncertainty and the quiet anticipation of tougher adjustments ahead.
The country’s GDP growth forecast has been trimmed from 4.5% to 3.3%. It may seem like a small adjustment, but in economic terms, that drop has weight. Slower growth means less revenue flowing into state coffers and mounting pressure on central bank reserves.
Already, the review reveals worrying trends, revenue collection is at its weakest point in a decade, with an execution rate of just 39.6%, well below the 10-year average of nearly 50%.
In response, the government is looking for new ways to plug the gap. Proposals on the table include a sugar tax, a dividend tax, and tighter enforcement of tax collection to name a few, but these are short-term fixes.
Right now, Namibia’s revenue performance leans heavily on the global rally in gold and uranium demand and export receipts, a rally powered by international uncertainty, not domestic strength. As history has shown, these commodity booms are cyclical.
They come, they go, and they are no solid foundation for fiscal planning.
What Namibia truly needs is growth from within — new businesses, more jobs, and a thriving private sector that naturally expands the tax base.
While the government’s decision to channel funds towards hiring 1,537 medical and 665 education professionals is commendable, the long-term health of the economy depends on reigniting private investment. At present, that engine is idling.
Over to the expenditure front, spending has been trimmed slightly, largely due to cuts in development allocations. Yet beneath that lies a growing concern: Namibia’s repayment obligations are steadily mounting. Interest payments have been revised upward to N$14.4 billion from N$13.7 billion, while domestic borrowing requirements have climbed to N$22.3 billion at mid-year review.
These figures tell their own story. Debt, once a quiet background concern, is becoming a louder presence in the national balance sheet.
The total debt-to-GDP ratio now stands at 67.5%, with projections pointing to a further rise to 69% in the next fiscal year. It is a reminder that while short-term control over expenditure offers some comfort, the underlying fiscal pressures are far from easing.
The Ministry of Finance now aims to move away from relying solely on bond issuance, opting instead for a more “diversified” approach using state guarantees to support commercially viable SOEs. In theory, this sounds prudent.
In practice, Namibia has walked this path before — just look at the cautionary tale of Air Namibia. Without strong governance and realistic planning, such strategies risk becoming short-term stabilising interventions, rather than sustainable solutions.
With revenue slipping and expenditure quietly creeping upward, it is hard to avoid the inevitable conclusion: debt will rise. The official debt-to-GDP forecast looks optimistic, perhaps too much so.
A more sober outlook would acknowledge that the storm clouds are gathering again, not for immediate crisis, but for the longer-term sustainability of Namibia’s fiscal house.
The message from this mid-term review is clear. Optimism is welcome, but realism is overdue. Without it, another year of shortfall may be waiting just beyond the horizon.
* Kara van den Heever is an Investment Analyst at Momentum Investments
